A bad credit mortgage, also known as a subprime or adverse credit mortgage, is a type of home loan specifically designed for individuals with a less-than-ideal credit history.
Lenders offer bad credit mortgages to borrowers who may have experienced financial difficulties in the past, such as missed payments, defaults, or bankruptcies. These situations often make it challenging to get approved for a standard mortgage, but bad credit mortgages provide an opportunity to get on the property ladder.
The amount you can borrow with a bad credit mortgage will depend on several factors, including the lender’s policies, your credit score, income, and affordability. Bad credit mortgages are often riskier for lenders, so they may impose more conservative lending limits compared to standard mortgages.
For example, if you had a bad credit mortgage on a property valued at £250,000, a lender offering a maximum loan-to-value (LTV) ratio of 75%, you could potentially borrow up to £187,500, subject to affordability assessments and the lender’s specific criteria.
Deedle is an independent advisor. We can help you find a bad credit mortgage by collaborating with specialised mortgage providers. Our unbiased advice and access to a wide array of mortgage products will help us match you to the perfect lender, no matter your credit score or budget.
You can get a bad credit mortgage to purchase a property anywhere in the UK. Deedle can help you no matter where you’re located. For example, we help people get bad credit mortgages in:
Yes! While it may be more challenging to secure a bad credit mortgage with a recent bankruptcy, it is not impossible. Some lenders may consider applicants with bankruptcies that have been discharged for a certain period.
However, expect higher interest rates and stricter terms. To increase your chances, work on rebuilding your credit and saving for a larger deposit.
Yes, bad credit mortgages usually come with higher interest rates than standard mortgages. The elevated rates reflect the increased risk to the lender due to the borrower’s poor credit history.
As your credit score improves over time, you may have the opportunity to remortgage to a better rate in the future. You can even remortgage with bad credit, although again these will come with less favourable rates.
Adding someone with bad credit to a mortgage can impact the overall creditworthiness of the application. Lenders have to consider the credit profiles of all parties involved when looking at the loan application.
Yes, you can get a shared ownership mortgage with bad credit. Shared ownership lenders understand that buyers may have past financial difficulties, and they may be more flexible than traditional mortgage providers.
With a bad credit shared ownership mortgage, the buyer applies for a mortgage specifically tailored for individuals with impaired credit histories. Once approved, the buyer can select a share of the property they can afford (typically between 25% to 75%) and pay a deposit on that share.
The buyer will then pay a monthly mortgage payment on the share they own and a subsidised rent on the remaining share. As the buyer’s financial situation improves, they have the option to increase their share through staircasing.
No, there are no lenders that offer guaranteed approval except ones who are misleading consumers. However, some lenders may have more lenient criteria for bad credit applicants.
Yes. The subprime mortgage crisis of 2007 to 2008 meant the availability of such mortgages decreased temporarily. However, they are back under different names (bad credit mortgages, non-prime mortgages, etc.)
